Fears of stronger AI focus at Xbox: Microsoft Gaming CEO steps down – former CoreAI head takes over

Microsoft’s gaming division may be facing significant change. Phil Spencer will step down as CEO of Microsoft Gaming on February 23, 2026, while Xbox President Sarah Bond is also departing the company. Asha Sharma is set to assume overall leadership. A successor for the Xbox President role has not yet been announced.

The announcement has triggered intense debate within the community, largely because Sharma previously led Microsoft’s CoreAI division. Since 2014, Phil Spencer had served as the public face of Xbox, guiding the brand through its strategic realignment following the troubled launch of the Xbox One. During his tenure, services such as Xbox Game Pass were introduced and significantly expanded. With Sharma now at the helm, Microsoft’s gaming division may be entering a new phase. Given her background, many Reddit users fear that generative AI could play a more prominent role in the company’s future strategy.

In her first interview with IGN as head of Microsoft Gaming, Sharma sought to calm these concerns. She stated that she has “no tolerance for bad AI,” emphasizing that artificial intelligence should foster innovation rather than produce generic, soulless content. Sharma stressed that quality and a distinct creative vision must remain central to game development. A truly great game, she argued, is defined by its emotional impact and clear perspective. As an example, she cited the narrative adventure Firewatch.

At the same time, Sharma intends to reposition Xbox as a console-focused brand while maintaining its multiplatform strategy across PC, mobile, and cloud. To win over the community, however, she will need to demonstrate that these ambitions translate into concrete action. Phil Spencer will remain in an advisory capacity until summer 2026 to support the transition.